427 Mendocino Ave. Suite 100 Unit #119, Santa Rosa, California, United States of America, 95401
Following an unseasonably cool spring and start to summer, California received some overdue 100°F+ heat in late June into early July, though unusually mild spells continue to interrupt these hotter periods, particularly in the Coast during the mornings. More normal, consistently hot weather is in the forecast for the rest of summer, but for now the growing season is still running 3-4 weeks behind in many areas of the state, particularly in the Coast. There is talk in the Interior that the season has caught up a little in some areas, to something like 1-2 weeks behind, but the popular barometer of a ‘normal’ timetable – veraison on Lodi Zinfandel by July 4th – was missed, and indeed veraison was not apparent anywhere in the first week of July.
Consequently, it remains too early to provide a confident guesstimate of crop size. Berry sizing is underway and cluster numbers in general appear good, although shatter occurred on some varieties in some areas of both the Coast and Interior; mildew has also been an issue in places. In general, however, vineyards appear in good shape. Some growers have been thinning out the later-season varieties, potentially in an attempt to ensure they adhere to winery schedules and quality standards in a year in which grape demand is very slow.
The grape and bulk wine markets continue to be sluggish with transactions few in number and often taking a prolonged time to close. Case-good sales numbers continue to look weak, with growing evidence that the $15+/bottle categories are slowing now as well. Wineries are focusing on inventory adjustments and some have indicated they might even need to skip a vintage in order to return to supply/demand balance. As across the wider economy, we continue to hear of rightsizing – with non-profitable brands discontinued, employees laid off and steps being carried out to improve margin.
In this context, growers and bulk suppliers have become less bullish on price as the new vintage nears. Therefore, there are some excellent multi-year wine and grape opportunities to be harnessed from a price-quality perspective, some that come along only rarely and some that dovetail with the need to innovate and communicate with younger consumers. Retail/distributor consolidation has limited the enterprising negociants who might in the past have been seen on the market right now, harnessing such opportunities, but those able to – in the words of Warren Buffet – “get greedy when others are fearful” currently have a lot of choice. Rabobank’s latest Wine Quarterly referred back to the often-quoted 2010 Harvard Business Review article ‘Roaring Out of a Recession’, which stated that those companies that increased marketing spend, capital expenditure and R&D in an economic dip were more likely to have better sales and profits post-dip than their competitors. In short, the cut-through of new lines – or re-energized preexisting lines – is greater at a time when competitors have lowered their voices.
In these challenging times, the Ciatti team can combine its many decades of experience together with the most up-to-the-minute intel to find opportunities for buyers and sellers alike: Don’t hesitate to get in touch. In the meantime, read on for our latest analysis.
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Locations | Address | State | Country | Zip Code |
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Lumo | 427 Mendocino Ave. Suite 100 Unit #119, Santa Rosa | California | United States of America | 95401 |